Agilent recently opened a customer applications and training center in South Korea.

Credit: Agilent Technologies

REACH OUT

Agilent recently opened a customer applications and training center in South Korea.

Credit: Agilent Technologies

As instrumentation companies plan for 2013, uncertainties that fogged 2012 are still clouding the view. Fiscal pressures on U.S. spending, weakness in the economic-crisis-hit eurozone, and mixed signals from emerging markets remain troubling, at least for the short term.

The total market for analytical and lab instruments was about $44 billion in 2012, according to the market research firm Strategic Directions International. For 2013, instrument makers are predicting that the rate of sales growth will stay in the low single digits, at least in the early months.

Agilent Technologies is predicting about 3.5% revenue growth for its fiscal year, which will end Oct 31. “We’re assuming there will be no new financial crisis in the U.S. or Europe,” CEO William P. Sullivan told stock analysts in late 2012. “However, continued uncertainty will dampen demand until the second half.”

Spending by academic and government customers likely will stay constrained, especially in the West, and industrial markets will be slow, suppliers say. Many are upbeat, however, about the megatrends in the global energy, environmental, forensics, and food sectors. And the drug discovery and diagnostics areas should remain stable, they say.

Despite the short-term challenges, “there is long-term promise in many end-use markets,” says Mike McMullen, president of Agilent’s chemical analysis group. Although making a call on 2013 is difficult, the “megatrends are here to stay,” he adds.

Many firms plan to expand further in emerging regions. Although China’s economy slowed in 2012, the country remains attractive. “Limited local competition and an intense government focus on lab infrastructure build-out and academic research make the life sciences tools and diagnostics industries well positioned in China,” Goldman Sachs analyst Isaac Ro pointed out in a late-2012 report.

Healthier growth rates in emerging versus mature markets are causing a shift in emphasis by suppliers, Thermo Fisher Scientific CEO Mark Casper told analysts in late 2012. “You’re going to see more investment in those markets and a tighter level of investment control in Western Europe and the U.S.”

Thermo, for example, has been decreasing its manufacturing footprint overall but building in low-cost regions. “While we have a lot of initiatives in place to position the company for growth, we are also being prudent and carefully managing our costs,” Casper said. “We’ll closely monitor the market environment, and we’ll take additional cost actions as necessary.”

Watching costs is important, but so too is investing in R&D and others areas, PerkinElmer Senior Vice President Dusty Tenney says. “If we don’t invest, we’ll end up losing windows of opportunities, not only in 2013, but ones that can help further the business in 2014 and 2015.”